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Running on fumes

Negotiations in progress to save bankrupt Alitali

Editorial Staff

September 18, 2008

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Italy's ailing national airline is bankrupt and can no longer guarantee scheduled flights. Without the liquid finds necessary to purchase petrol, thousands of distressed travellers across the world risk being grounded for good. In an effort to avoid collapse, the country's biggest unions have been holding frenetic talks with members of a consortium willing to buy-out the ailing state-controlled airline. Called Compagnia Aerea Italiana (CAI), the consortium is made up 19 potential investors who are some of Italy's biggest and wealthiest entrepreneurs.

However, fierce opposition from the carrier's unions has threatened the Alitalia rescue deal. CAI pulled out of negotiations with unions on September 12 when the union leaders refused to accept what they said were necessary staff and pay cuts.

In an effort to avoid the inevitable job loses caused by collapse, unions agreed to cut some 3,000 workers and reduce salaries by as much as 40 percent on September 14. According to CAI's industrial plan, the unprofitable services offered by Alitalia are to be sold or liquidated.

Next on the negotiating table are salary cuts and new employment contracts, however government officials have expressed strong concern over the difficulties of successfully negotiating a deal with pilots and cabin crewmembers.

Alitalia had been losing approximately 2 million euros a day when it filed for insolvency on August 29. A special bankruptcy commissioner, Augusto Fantozzi, was appointed by state officials to help push through a government-backed rescue plan with CAI investors. Fantozzi will also be responsible for selling the airlines remaining assets.

Under the rescue plan, the investors would inject 1 billion euro into the company to ensure keep running. It would then merge its viable assets with Italy's smaller rival carrier, Air One, and seek a partnership with a foreign carrier.

The question remains whether Alitalia will survive the negotiations. The jet fuel problem got worse on September 15 when chief of the Italian oil giant ENI, Paolo Scaroni, told La Repubblica in an interview that he would not give Alitalia fuel on credit ‘even if Berlusconi or the pope asks me to'.